Since the world was hit by Covid-19, the gold prices have been increasingly engaging investors to invest more in it. Buying gold ornaments is nothing new for the Indians. However, if you are looking at gold from the perspective of earning profit or good return from it, then the approach changes and along with that, the form of gold changes too. From a pure investment perspective, digital gold is a new opportunity to make good investments.
What is Digital Gold?
The term digital gold is relatively new and one might wonder, what exactly is digital gold. It is a 24 carat of 99.9% pure gold that the purchaser does not need to store. The investment in digital gold is made through online modes like internet banking and UPI transactions. Once the purchase is being made, a digital invoice is provided to the purchaser within minutes. When someone purchases digital gold, the facilities for the same are stored in a secured vault which saves the investor from any sort of theft. When purchasing physical gold, one always goes for the hallmarked one to ensure its purity, however, no such hassle exists when dealing with digital gold as they are certified by government-licensed agencies.
The Advantages of Digital Gold
The good thing about purchasing digital gold is that one does not require too much money to buy it. An investor can start by investing even a rupee in digital gold and sell it whenever they want to on the same platform. When a sale is done, the same unit of gold is debited from the account and the net value is credited mostly within four hours. Digital gold ensures hassle-free liquidity that can occur almost immediately. On the basis of the Gold Rate, one can buy and sell digital gold to earn a maximum profit for their investment.
The Problem with Digital Gold
Even though investment in digital gold might look very attractive, it has its own drawbacks. The very first drawback with digital gold is that when it is being sold, the base price of the gold will decrease due to additional costs that involve storage costs and insurance costs. The percentage for the same may vary anywhere near to 3 to 6 per cent. Further, one cannot hold the digital gold for an indefinite period of time. At some later point, the digital gold will either be delivered physically or needs to be sold. People who believe in Horoscope, might look for a good date to get the gold delivered physically if they want to instead of selling it. On getting the gold physically delivered, one will have to bear the making charges and delivery cost. Further, when an investor sells digital gold, capital gain tax is also added to it. On the basis of how long the digital gold was stored, the holding will either fall under the category of Short Term Capital Gain or Long Term Capital Gain. The impact of this won’t be felt for a small investment. However, the impact of it is huge when it comes to large investments.
From Where To Buy Digital Gold?
One can buy digital gold either from Phone Pe or Google Pay using the UPI ID. The digital purchased from Google Pay is insured completely by MMTC-PAMP. In addition, Tanishq has also launched digital gold. The digital gold offered by Tanishq is tied up with the Digital Gold India Pvt. Ltd. Even though there are other companies offering digital gold, Tanishq has become the only jewellery brand to include digital gold in their service. One can buy digital gold from Tanishq for an amount as low as only INR 100. Currently, SafeGold, MMTC and Augmont and similar companies can sell and store digital gold. One must note that these companies are not regulated either by SEBI or RBI.
Gold can be used to diversify the portfolio during high inflation and systemic risk. In the last year alone, the gold price increased by 28.2 % and if one does not want to invest in gold jewellery but wants to own gold, digital gold offers a lucrative option. Even though digital gold was foreseen, the development of the same was highly triggered by Covid. With everything going digital, even gold is going digital now.